Huge $49B Verizon sale rocks bond world

Sep. 11, 2013
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A Verizon store in New York City. / Spencer Platt, Getty Images

by Matt Krantz, USA TODAY

by Matt Krantz, USA TODAY

Telecom giant Verizon sold $49 billion in bonds Wednesday, amounting to a record-breaking deal that would push bond-issuance to its highest total since 2008.

Verizon raised $49 billion selling bonds, marking the largest corporate bond sale in history and bringing the year's total corporate debt sales to $540 billion, says Thomson Reuters. It marks a 21% increase in U.S. bond sales since the same period last year and the most since $541.5 billion was sold at this point in 2008.

Verizon sold the bonds in eight parts, including securities with maturities spanning from three to 30 years, says Bloomberg News. Verizon bond investors won a relatively attractive price, getting a yield on the 10-year portion of the issuance that was nearly a half percentage point -- 47 basis points -- higher than other corporate bonds with comparable credit ratings, Bloomberg News says.

For instance, the company sold $11 billion of 10-year debt at 5.15%. That's a bit less than 2 1/4 percentage points above the 3% current yield on the benchmark 10-year Treasury.

Verizon is selling the bonds to finance its recently announced plan to buy the 45% of its Verizon Wireless joint venture with Vodafone it doesn't own. The $49 billion bond issue dwarfs the previous record, $17 billion raised by tech giant Apple in April, Thomson Reuters says.

Verizon said Sept. 2 it will pay roughly $130 billion in cash and stock for Vodafone's 45% stake in Verizon Wireless.

Despite the ramp up in U.S. bond sale activity, bonds have been a tougher sell by companies globally. So far, $1.8 trillion in bonds have been sold by companies around the world, down 7% from the same period last year.